A Lease Versus Purchase Analysis Should Compare the Cost of Leasing

Multiple Choice

A lease versus purchase analysis should compare the cost of leasing to the cost of owning, assuming that the asset purchased

A) is financed with long-term debt.
B) is financed with debt whose maturity matches the term of the lease.
C) is financed with a mix of debt and equity based on the firm's target capital structure, i.e., at the WACC.
D) is financed with retained earnings.
E) is financed with short-term debt.